Economics Department

ECON 202 – INTRODUCTION TO MICROECONOMICS.

Winter 2011

Instructor: Karim Seghir

Office: 1020 BEC building.
Email: kseghir@aucegypt.edu
Phone: 3187
Office hours: MW from 2PM to 3.30PM, or by appointment.
Class Location: CP09 (BEC building).
Meeting Times: UMTWR from 10.00 to 12.55.

1. Catalogue Description

Fundamental economic concepts and methods of economic analysis with emphasis on

microeconomic issues. Major topics include price determination, theory of the firm, market
structure, resource allocation, and social welfare implications.

2. Learning Outcomes

After completing this course, students should be able to:

a. Explain and articulate basic theories of Microeconomics.
b. Identify the strengths and limitations of these theories.
c. Solve basic numerical and analytical problems in Microeconomics.

3. Readings

Main Assigned Textbook:

Case, K.E. and Fair, R.C.: Principles of Economics, 8th Edition, Prentice Hall, 2007.

Other Recommended Readings:

• Mankiw, Gregory: Principles of Economics, Third Edition, Thomson South-Western,

2004.
• Samuelson, P. and Nordhaus, W.: Economics, 18th Edition, McGraw Hill/Irwin, 2004.
• McConnell, C. and Brue, S.: Economics, 15th Edition, McGraw Hill, 2001.

4. Grades and Exams

• There will be 3 exams. Each exam is worth 25% of your overall grade. All exams will be
multiple-choice. Exams will be on Blackboard and will be in Room/Lab 1063 (BEC building).
• Attendance-Assignment-Participation is worth 15% of your grade.
• Attendance is important to understand the material and to enrich class discussions. Students are
supposed to participate to discussions and debates, answer the challenging questions that I’ll be
regularly asking and ask exciting questions. You are also urged to express your views and
discuss the points you don’t understand or don’t agree.
• You’ll have 12 Blackboard (online) assignments and 5 on-paper assignments. No late
submission will be accepted. These assignments will affect your
Assignment/Attendance/Participation grade as explained in the table below.
American University in Cairo Winter 2011 Department Economics

• Debates will be organized in class. The objective of these debates is to put in practice the
concepts and methods that we have discussed throughout the semester. These debates will
assess your critical thinking, communication skills and logical argumentation. The topics of the
debates will be announced during the semester. The debates are worth 10% of your grade (see
table below).

If the final class average is below 75, I will give a raise. Whether you qualify for the raise depends on
your overall performance, attendance, academic integrity, and classroom behavior. I will decide on the
exact procedure of raises at the end of the semester. The exam dates are given by the following table:

EXAM WEIGHT DATE

Exam 1 25% Tuesday, January 11th, 2011
Exam 2 25% Tuesday, January 18th, 2011
Exam 3 25% Sunday, January 23rd, 2010
Attendance-Assignment-Participation 15%
Debates 10% Sunday, January 23rd, 2010

5. Class material on Blackboard:

• This course is Blackboard supported. I will communicate all essential information through
Blackboard.
• All exams will be on Blackboard. It is your responsibility to maintain a valid Blackboard account
and to keep yourself up-to-date regarding the information we communicate through Blackboard. I
recommend you to log on to Blackboard at least once a day! If you come to an exam and do not
have access to Blackboard for reasons that are due to your personal neglect, you will fail the exam
with a “zero.”
• On Blackboard you will find essential lecture material, problem sets, practice questions,
assignments and useful communication tools such as email and a discussion board.
• On Blackboard, you’ll also find an information sheet (word file). To help me recognize you and
remember your name, you should fill in the word form and hand it in the first week of the semester
(with a recent picture of yours attached with the form).

6. An Intensive course:

• Classes meet 3 hours daily, Sunday through Thursday. Because of the intensive nature of the
course, regular attendance is expected.
• Missing one lecture in the winter semester is like missing one week during regular semesters!
• Fifteen lectures (3 hours each) will be given. Students are required to attend at least 11
lectures. A student who misses more than four lectures in the semester will not qualify for
the raise I might give at the end of the semester.
• An absence, whether excused or unexcused, is still an absence. Therefore, missing class for
any reason will count as an absence from class.

7. “One-Minute Paper”.

I’ll stop class 2 minutes early and ask you to respond briefly to the following questions:

• "What was the most important thing you learned during this class?"
• "What question(s) remains uppermost in your mind?"
• “What was the least clear concept during this class?”

You then write your responses on half-sheets of scrap paper and hand them in. You are not
required to write your names on the “one-minute paper”. The objective of this assessment tool
American University in Cairo Winter 2011 Department Economics

is to get your feedback rather than to know “who said what”. Your feedback is important to
improve and diversify teaching methods and re-explain the concepts that you did not
understand very well.

8. Class expectations

• Students are expected to be punctual in coming to class. A student who is often late may be
not allowed to attend the lecture. If you enter the classroom after class has started, please take
your seat as quickly and quietly as possible. I reserve the right to deny you access to the
classroom if I feel it may disturb the class. Three occasions of tardiness count as one
absence.
• Missing an exam is serious and will be handled on a case-by-case basis. If you miss an exam, you
must inform the instructor in advance, or immediately afterwards, to avoid receiving a failing grade.
Written documentation is required but not necessarily sufficient. All medical documentation must
be issued or confirmed by the AUC infirmary
• The material presented in class will complement, not substitute, for the material covered in the
assigned readings. Appendices, boxes, and exercises are part of the assigned readings. I also
encourage you to make use of the internet resources that come with your textbook. There you will
find, for example, additional quizzes.
• If you enter the classroom after class has started, please take your seat as quickly and quietly
as possible. I reserve the right to deny you access to the classroom if I feel it may disturb the
class. Three occasions of tardiness count as one absence.
• Office hours are an excellent venue for asking questions and assessing your progress. If you
fail an exam, pass by and see me as soon as possible so that I can advice you appropriately.
• I expect every student to maintain a high standard of academic integrity and to be familiar with
the policies and principles of student conduct. Please, visit the following AUC webpage for more
information on types of violations and recommended punishments:
http://www.aucegypt.edu/resources/acadintegrity/Disciplinaryprocedures/Typesofviolations.html

9. How to study in this course?

Economics must be understood; it cannot be memorized! I recommend you to do your

readings and end-of-chapter problems. You should be always alert and actively and
constructively participating in class. If there is still need for clarifications, ask me in class or
during office hours.

10. Readings (Tentative) and Key Concepts

CHAPTER READING KEY CONCEPTS

Chapter 1: Opportunity Cost, Scarce, Sunk Costs, Efficient Market
The Scope and Microeconomics, Macroeconomics
Methods of Why Study economics? Positive Economics, Normative Economics, Economic
Economics The Scope of Economics Theory, Ceteris Paribus, Empirical Economics,
The Method of Economics Efficiency, Equity, Economic Growth, Stability

Capital, Factors of Production, Production, Inputs and

Chapter 2: Introduction Outputs.
The Economic Scarcity, Choice, Theory of Comparative Advantage, Absolute Advantage,
Problem: Opportunity Cost Consumer Goods, Investment, Production Possibility
Scarcity & Choice Economic Systems. Frontier, Marginal Rate of Transformation, Command
Economy, Lissez Faire Economy.
American University in Cairo Winter 2011 Department Economics

Firms & Households: The Firms, Entrepreneur, Households,.

Basic Decision-Making
Units.

Input Markets and Output

Output Markets, Input Markets, Labor Market, Capital
Markets: The Circular
Flow. Market, Land Market.

Demand in Output Quantity Demanded Demand Schedule, Demand Curve,

Markets. Law of Demand, Income, Normal Goods, Substitutes,
Complements, Shift of a Demand Curve, Movement
Along a Demand Curve, Market Demand.
Chapter 3:
Demand, Supply and
Market Equilibrium

Supply in Output Markets Profit, Quantity Supplied, Supply Schedule, Supply

Curve, Movement Along a Supply Curve, Shift of a
Supply Curve, Market Supply.

Market Equilibrium. Equilibrium, Excess Demand, Excess Supply.

The Price System: Price Rationing, Price Ceiling, Queuing, Ration

Chapter 4: Rationing and Allocating Coupons, Black Market, Price Floor, Minimum Wage.
Demand and Supply: Resources.
Applications. Supply and Demand
Analysis: An Oil Import
Fee Supply and Demand
and Market Efficiency

Elasticity - Price Elasticity of Demand - Perfectly

Inelastic Demand - Inelastic Demand - Unitary Elasticity
- Elastic Demand - Perfectly Elastic Demand - Midpoint
Chapter 5: Elasticity Formula - Income Elasticity of Demand - Cross/ Price
Elasticity. Elasticity of Demand - Elasticity of Supply - Elasticity of
Labor Supply

Household Choice in Perfect Competition - Homogeneous Products - Perfect

Output Markets. Knowledge
Budget Constraint - Choice Set
The Basis of Choice:
Utility Utility - Marginal Utility - Total Utility - Law of
Income and Substitution Diminishing Marginal Utility
Chapter 6: Effects
Household Behavior Consumer Surplus - Diamond/Water Paradox-
and Consumer Cost/Benefit Analysis
Choice
Labor Supply Curve - Financial Capital Market
Consumer Surplus
Household Choice in Input
Markets

A Review: Households in
Output and Input Markets
American University in Cairo Winter 2011
Introduction
Chapter 7: The Behavior of Profit
The Production Maximizing Firms
Process: The
Behavior of Profit
Maximizing Firms The Production Process
Costs in the Short-Run
Chapter 8:
Short-Run Costs and Output Decisions:
Output Decisions. Revenues, Costs, and
Profit Maximization
Looking Ahead
Short-Run Conditions and
Long-Run Directions
Chapter 9: Long-Run Costs:
Economies and
Long-Run Costs and
Output Decisions. Diseconomies of Scale
Long-Run Adjustments to
Short-Run Conditions
Input Markets: Basic
Concepts
Chapter 10: Labor Markets
Input Demand: The
Labor and Land The Firms Profit
Markets. Maximizing Condition in
Input Markets
Input Demand Curves
Imperfect Competition
and Market Power: Core
Concepts.
Price and Output
Decisions in Pure
Monopoly Markets
Chapter 13:
Monopoly The Social Costs of
Monopoly
Price Discrimination.
Department Economics
Production, Firm, Perfect Competition, Homogeneous
Products.
Profit, Total Revenue, Short Run, Long Run, Optimal
Method of Production,
Production Technology, Labor Intensive Technology,
Production Function, Marginal Product, Law of
Diminishing Returns, Average Product.
Fixed Cost - Variable Cost - Total Cost - Total Fixed
Cost - Sunk Cost - Average Fixed Cost - Spreading
Overhead - Total Variable Cost - Total Variable Cost
Curve - Marginal cost - Average Variable Cost -
Average Total Cost
Total Revenue - Marginal Revenue
Breaking Even - Operating Profit - Shut Down Point -
Short Run Industry Supply Curve
Increasing Returns to Scale - Constant Returns to Scale -
Decreasing Returns to Scale - Long Run Average Cost
Curve - Optimal Scale of Plant
Long Run Competitive Equilibrium
Derived Demand - Productivity of an Input - Marginal
Product of Labor - Marginal Revenue Product
Factor Substitution Effect - Output Effect of a Factor
Price increase or Decrease
Demand Determined Price - Pure Rent
Marginal Productivity of Income Distribution
Pure Monopoly - Barrier to Entry - Government
Franchise – Patent
Collusion
Rent Seeking Behavior - Government Failure - Public
Choice Theory
Price Discrimination - Perfect Price Discrimination
American University in Cairo Winter 2011 Department Economics

Monopolistic Competition Monopolistic Competition - Product Differentiation

Chapter 14:
Monopolistic Oligopoly Oligopoly - Cartel - Collusion- Cournot Model - Kinked
Competition and Demand Curve Model - Price Leadership - Game Theory
Oligopoly. - Dominant Strategy - Prisoner's Dilemma - Nash
Equilibrium.

11. Grading System:

MIN MAX GRADE

93 100 A
90 92 A-
85 89 B+
80 84 B
75 79 B-
70 74 C+
65 69 C
60 64 C-
55 59 D+
50 54 D
0 49 F

HAVE A PRODUCTIVE SEMESTER!

American University in Cairo Winter 2011 Department Economics